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SEC Overhauls Management Disclosures, Avoids Climate Change

Nov. 19, 2020, 10:52 PM

The Securities and Exchange Commission issued a final rule package Thursday that eliminates some financial disclosures and updates requirements for reporting related to liquidity and accounting estimates, but doesn’t address pleas to require climate change reporting.

In a 3-2 vote, commissioners approved a measure to update and streamline requirements for the management’s discussion and analysis portion of financial reports, part of an ongoing efforts to modernize its disclosure rules.

  • In a statement, Chairman Jay Clayton said the rules will give investors better insight into the factors that drive how the business is managed while reducing compliance costs for statement preparers.
  • Commissioners Allison Lee and Caroline Crenshaw opposed the package. Lee previously criticized it for not addressing climate change reporting and for eliminating what she said were significant disclosures.
  • Under the final rules, which amend Items 301, 302, and 303, companies will no longer have to report five years of certain financial data or include a table detailing contractual obligations, but they have updated requirements for liquidity and capital resources disclosures.
  • Investors told the SEC that the changes will strip away key disclosures they relied on during the spring shutdowns as companies furloughed workers and revenue dropped.

To contact the reporter on this story: Amanda Iacone in Washington at aiacone@bloombergtax.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Kathy Larsen at klarsen@bloombergtax.com

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